Total expenditures on a company's product will be largest when it is priced such that the elasticity of demand:
A. equals -1.
B. is greater than -1.
C. is less than -1.
D. equals 0.
A. equals -1.
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You have a $500 saving bond. The nominal interest rate is 10 percent, and the inflation rate is 4 percent. After a year, in real terms you have earned
A) $70. B) $40. C) $50. D) $510. E) $30.
In a market with asymmetric information, ________
A) buyers tend to forget relevant information about the good being traded B) buyers set the price of the good being traded C) buyers and sellers have different information about the good being traded D) buyers have very low bargaining power
Individuals base their demand for an asset on
A) the expected return the asset offers compared with the returns offered by other assets. B) the riskiness of the asset's expected return. C) the asset's liquidity. D) the expected return, how risky that expected return is, and the asset's liquidity. E) the aesthetic qualities of the asset.
The concept of limited liability
A) does not apply to a corporation. B) means that the owners of a corporation have liability limited to the value of the shares in the firm. C) means that owners of a firm are subject to double taxation. D) limits the amount of specialization that can occur in a firm.